You probably think anyone who takes elves and other fantasy beings seriously is either childish or just plain mad. According to polls, most Icelanders believe in, or at least refuse to deny the existence of elves, and most of them seem pretty sane to me. Welcome to Iceland, the small island country where technological advancement goes hand in hand with a belief in the supernatural.

Located just below the Arctic Circle, Europe’s most remote nation is also probably one of the world’s most bizarre. Civilized, and certainly no strangers to technology, the majority of 320,000 Icelanders also firmly believe in the existence of spirit beings like elves, gnomes or fairies. Of course, there are fantasy-enthusiasts who believe in these creatures all over the world, only in Iceland this matter really is taken very seriously. Annoying the mystical creatures living all over the island is thought to carry a heavy price, so human inhabitants will do almost anything to avoid getting on their bad side.

In America, people will call upon feng shui experts to help turn their homes into springs of positive energy, but in Iceland it’s elf spotters who decide how a human settlement develops in order not to disturb the country’s supernatural inhabitants. It might sound funny, but engineers will often reroute roads, pipelines and cable, at a steep cost, only to avoid the dwellings of elves and other hidden beings. All around the island, one can hear tales of fishermen lost at sea because they ignored warning from the elves not to leave port, or of people suffering mysterious illnesses or their houses burning down after provoking the wrath of invisible beings.

In 2004, construction crews building a golf course on the outskirts of Reykjavik moved a rock believed to be the dwelling of elves. Bulldozers started failing and workers became victims of strange injuries, and so the chief engineer eventually issued a grovelling apology to the elves and vowed not to trouble them again. The event was made public by present media reporters, but the accidents stopped occurring and the golf course was completed on schedule. Not all Icelanders are convinced these fairy-tale being exist, but even those who say they don’t believe in them prefer to behave as if they did, just to make sure nothing bad happens.

But where does this strong belief in the supernatural come from? The most logical answer would be Iceland’s isolation from the rest of the world. Just over a century ago, its inhabitants were inhabiting turf homes, and making a living as fishermen or sheep farmers. Experts believe Enlightenment, which put science ahead of superstition, arrived too late in Iceland. Also, to better cope with the dark cold winters, Icelanders developed a rich storytelling tradition, full of heroes, supernatural beings and other folk elements. Throughout the years, the lines between these old tails and reality seem to have blurred, and people started to actually believe in fantasy. “Stories about elves and hidden people are part of our heritage, but I also like to think some of them are true. It’s fun to believe in something you can’t explain, and anyway, it’s hard to be 100 percent scientific in a country as weird as ours,” says an university student. And it’s also the look of the land that makes people people believe in the supernatural. A jagged coastline full of bays and fjords, impressive geysers, beautiful waterfalls and springs and threatening volcanoes are all part of this fairy-tale land that would almost have anyone believe they’re in a Tolkienesque world.

Elves, trolls and fairies are common conversational topics in Iceland. Locals tell you stories about jinxed buildings in Reykjavik, or ghosts living in their homes and factories, and even the media often reports encounters with spirit beings. And just so you know, whenever a wallet is lost, trolls are to blame. Iceland’s love of the supernatural is so great, it has given birth to the world’s first Elf School, right in the country’s capital. Believe it or not, thousands of people, most of them foreigners, pay a $60 fee for a one-day course on elves and other hidden beings. Magnus Skarphedinsson, the historian who runs Iceland’s elf school, believes the country is home to over 20,000 supernatural creatures. “Perhaps these beings are more visible in Iceland because we are more open-minded,” he says. “We also live very close to nature, which is their home.”

According to Icelandic lore, hidden beings inhabit a parallel world that is invisible to human eyes, and can only be spotted by physics and little children, unless they willingly decide to reveal themselves to people. Skarphedinsson, who has never seen a spirit-being himself, claims three humans have actually married hidden people and vanished into their world.